aztrader9 

Its a lazy Sunday afternoon. I went to church this morning, had lunch with my parents afterwards, fixed my dad's computer issues...again....and in general, had a real nice weekend so far. I spent a few hours on Friday and also on Saturday morning thinking about my trading business, reviewing some charts and I realized I make trading way to difficult. To much thinking involved. To much analysis just before a trade. The fact is, I recognize a decent set up when I see it. The only thing that causes me hesitation is if I perceive the trade as having to much risk. There is an easy cure for this. More on this in a minute. So I decided to simplify once more. I have what is essentially a pull back strategy and a decent way to figure out when to enter. I have struggled this last week with the exits. To soon, or to late. I have a fix for this as well. The five minute chart is great, but after last week, I decided it was a tad slow for me. I would like just a few more set ups each day especially early on in the session. So I looked at a three min chart as well as a one min chart. I opted for a three min chart and the range chart. I think I should get 3-5 set ups each morning and that is enough. As for targets, I have been wanting to capture bigger moves. I see the larger targets. I want them. BUT this has led me to a place of uncertainty in terms of when to exit. I found myself in a state of panic when I had 20+ ticks of profit on the table and knowing I was gonna sit through a pull back to get more. I found this emotionally hard to take. I am an all in all out trader. Sitting through the pull backs to achieve 50 ticks on most days is not what I want to do right now. I am willing to sacrifice the 50 ticks in one trade for the 20 ticks initially for the sake of emotional stability. So for the foreseeable future, I will be using fixed targets. I have accepted the fact I will not be getting a 50 tick move. Instead, I will opt for fixed 20 tick targets and look for 2-4 of these each day. I recognize the increased risk this puts me at in terms of being in the market more often. I accept this. For risk management, I will opt for the entry bar top or bottom as the stop, if its 20 ticks or less, I will use 2-3 cars. If its 20+, I will use 1 lot for the trade. Biggest stop I will entertain is 30 ticks. This puts my risk reward ratio at 1:2 and I accept the inverse of this situation. Worst case scenario, I have 4 trades each day of one lot each. Assuming 100% success (I know, nothings 100%) that is $800 in profit. Assuming 75% success and a 30 tick stop on the loser, that's net of $300 and I can live with that. At some point, I will be able to do that with 2 lots on the 30 tick stop trades and that works out to a $600 net. So best to start small and work up. With regards to the entries, I have decided to take three kinds of trades, all of which I see fairly easy in real time. These are labeled on the chart as A, B, C and described below. There is a fourth area of importance. The Transition Zone. This area is labeled on the chart as TZ. A) Trend Trade. (TT) Defined as TOUCHING the 50SMA and closing in the direction of the larger trend. This generally represents a significant pull back in the trend and usually the lowest risk trade possible in the sequence. B) Counter Trend Trade. (CTT) Defined as closing beyond the 15SMA counter to the prevailing larger trend as defined by the 50 SMA. This must have PA to support. C) Trend Continuation Trade (TCT) Defined as a trade that continues the prevailing trend as defined by the 50SMA but does NOT touch the 50SMA. For me, these are the most risky trades as there must be support and resistance nearby, I must read that support and resistance well and have read the most recent price action perfectly. Therefore, there are more variables to account for and consequently, more room for error. I am making a change from candles to bars on the time chart, I can see the open and close better with them. I have also introduced the Reversals indie to help me visualize the price action and key turning points. This is not needed for trading but does aid me in visualizing PA. I have removed the 5SMA from the charts. They are not needed for the kind of trading I feel myself beginning to embrace. This represents a sea change for me in terms of clarity of strategy and tactics. My entire trading career, I have been unable to define a trade in these simple terms. I have been striving for this kind of simplicity for a long time now and the last couple of weeks watching the 5 min chart play out has convinced me this is the way to go. I have elected the three minute chart for two reasons. 1. More setups and 2, smaller stops. Otherwise, I would be using the five minute chart. One day I will move to the five minute and shoot for fewer trades with larger targets. For now, this will suffice. After having gone through this exercise and the last couple of weeks of relative success, I finally realize down deep in that place we refer to as our "heart", that I am now at a moment of opportunity. The opportunity is this: I can continue down the Holy Grail road or I can recognize the only obstacle to true success is me. This weekend, I received my copy of "Golf Is Not A Game Of Perfect". This book was a game changer for me. The lessons presented within its covers are more than appropriate for trading. I recommend every trader reading this thread to obtain a copy and digests its lessons as it will provide nourishment for your trading soul. As a result of reading this book, I have the following commitments to make: 1. I will spend 75% of my time on the mental aspect of trading vs the tactical or mechanical aspects of trading. This means more attention to my diet, my physical health, my mental well being while engaged in non trading activities and in general, making sure my mind is fit to trade. I will also engage in intensive visualization. I do this while playing golf, why not in trading? The author recommends it to his pro tour players and if its good enough for them, its good enough for me. I no longer care about the outcome of each individual trade. I recognize the impossibility of 100% success. I also recognize the statistical probabilities of my edge providing a nice living over time. Each trade will stand on its own. But each trade will contribute to the overall edge being defined over time. 2. The 25% of the time I do spend on tactics or mechanic, I will spend on the money activities. Exits...can I extend them without sacrificing my emotional stability? Money management. Position sizing, can I take more risk in certain circumstances? These things will require better record keeping. I will need to know the win rates of each of the three kinds of trades listed above and the average risk per trade. I will also spend a small amount of time each week looking at the tools....my chart set up, the indies and their settings. But this can only be done on Friday's after closing and only if I have a losing week. The reasoning here is this. The settings may need to be adjusted to compensate for volatility or some other unforeseen circumstance. Little if anything should be changed frequently. I anticipate making very few changes over time in this area. Tomorrow begins a new season in my trading career. One of simplicity, one of focus, one of goal driven discipline. Win, lose or draw tomorrow, I am excited.

I am adding one further item to the game plan. I will add a time stop to the tactical side. I will allow three bars to reach target. If target has not reached target, I will exit the trade as gracefully as possible. I listened to a master trader talk about when trades fail. He said the majority of his trades reach the first target in the first bar, the second target in the second bar and the third target sometime thereafter depending on how large the target is. He also said that if a trade was gonna fail AND the target had not been reached by the fifth bar, it would fail on the fifth one. After four bars without targets being hit, he was looking to exit gracefully. This trader trades daily bars. So for me, three bars as an all in all out trader is enough. On the fourth bar without a 20 tick trade being realized, I just want out. That is 3-12 minutes.

For some unknown reason, I am unable to post a new post and instead, am forced to use this reply to a previous post feature. I have PM'd BM but he is dealing with personal issues today and so I will be using this unwieldly method to do my journal.

Today was the first day using the three minute chart. It was very nice. I ended up with +50 ticks today with 8 trades. 6 winners and two losers.

My state of mind was calm, the trading was somewhat boring although the first trade, I changed my mind about which direction it would break about 10 times and at the last minute decided it was going down. I decided the chart was telling me down and thats what I went with.

I also tried out my new time based stop today. It worked but it also got me out before the profit target was hit on the next bar. I think I will keep it in place though as I would rather be out of a stalled trade than give back to much.

What I did wrong today:
1. I exited two trades today before the hard stop was engaged and before the three bar time stop engaged. The first trade would have hit my full my target within the 3 bar stop and the second one also would have paid 20 ticks within the 3 bar stop. The first one I exited with +10 and the second one at -10 so this sequence was a net zero ticks less commissions.
2. I took a long counter trend trade when both the 3 min chart and the range chart said there was not room within support/resistance to achieve my full profit target. This trade resulted in a -15 trade.
3. I passed on two trades I should have taken. One would have stopped out at even and the other would have paid 20 ticks.

What I did right today:
1. I followed my pre trading routine pretty well today.
2. I entered my trades exactly as the plan prescribes
3. I placed my initial stops exactly in the correct location. I exited most of them per plan as well but again, I exited two trades prematurely.
4. I hit my daily target and quit trading for the day.
5. I maintained a high degree of calm and confidence today. I did not beat myself up for the errors in stop management.

Plan for tomorrow:
1. Continue pre market routine
2. Focus on three bar exit or hard stop instead of worrying about a stalled trade. The lesson from today is that I have a good system, just give it time to play out.
3. Increase size after first win assuming the risk is within parameters.

Cheers....

Good job, keep it up

I have decided to simplify even further. I removed the 15SMA from my chart. It was primarily for counter trend trades anyway and those are super simple to see on the chart. I also removed the 5 SMA from the range chart. It now has only the 20SMA on it.

These changes are to further clarify the view of price action. I need to know the trend and thats it.

The rest will be reading price action, gauging risk, and trade management.

What are the lines in the background? How do you use them?

worldwary 

What are the lines in the background? How do you use them?

They are the major daily fib points plotted from the Globex open. The indie is here. https://nexusfi.com/free_downloads/vip_elite_circle/578-download.html?view

It plots the High, Low, 25%, 38%, 50%, 62% and 75% fib levels. As the high and low change, the other levels adjust, so you always know where price is in relation to the daily fib levels. Very handy. The indie rounds off the 23% and 76% to 25 and 75%.

I use them for support and resistance. I have found that if price has made a new low during the globex session, very rarely does it make a new high and vice versa. The levels basically allow you to see where the major pull backs are in relation to fib theory.

It started with me sleeping in by almost an hour. Then first two trades were losers...down 27 ticks right away.

I slowly dug out of it but at one point was down 35 ticks. I ended the day +49 ticks by keeping the losses as small as I could.

What I did wrong today:
Where to start on this?
1. I overslept
2. I cut my pre market routine short
3. No breakfast but to be fair, was not hungry like I normally am first thing
4. I had many decent entries.....but VERY poor trade management.
5. I exited way to many trades early when I knew I was in a winner. The three bar stop would have been very good to me had I obeyed it.

What I did right today:
1. I stuck it out.
2. I traded my plan as best I could given the circumstances I was in.
3. I remembered John Wooden's quote in my signature....winning and losing are self determined, but only the winners admit it...I decided to be a winner today.
4. I was tempted to quit when I got to +39 ticks, but talked it over with my wife and decided to keep trading.
5. I stopped when I reached my goal.
6. I was tempted to size up to get out of the hole....instead I stayed within my boundaries....1&2 lots. Mostly one.

Plan for tomorrow:
1. Hold the good trades. No exceptions.
2. Don't skimp on the pre-market routine.
3. Size when appropriate...defined as being up enough to withstand a full stop on the size and still be positive on the day.

Charts are ugly today....no comments from the peanut gallery on the incredibly messy charts.

I am taking an ugly win and walking away. In the end, no one cares how you won, just that you did.....assuming everything is legal and ethical of course.

Cheers.

P.S: I put the 15SMA back on...turns out I still need training wheels.

Days like this just ware you out right? haha..

bluemele 

Days like this just ware you out right? haha..

Totally exhausted afterwards.....but excited though because I performed well under pressure.

Az , I read all of your journal over the week end and am really impressed with your dedicatiion and how you have progressed . I have been trading CL but get inconsistent results . My mentality is that of a counter trend trader and after reading your journal it reinforces the need for an open mind . For what its' worth I have been looking at Al Brooks web site which has really improved my thought process . Thanks for sharing and keep up the good work .